Business Structures

Question 1

What are 2 advantages of a company?

Answer 1

1. More credibility in the market place

2. Easier to sell the business

Question 2

What are 2 advantages of a partnership?

Answer 2

1. No registration is required

2. Expertise is shared

Question 3

What are 2 advantages of a Sole Trader?

Answer 3

1. The owner can often work his or her own hours and run the business as he/she sees fit.
2. Easy to start and run

Question 4

What are 2 disadvantages of a company?

Answer 4

1. Directors need to clearly understand their responsibilities
2. Control is divided or shared

Question 5

What are 2 disadvantages of a partnership?

Answer 5

1. Putting personal assets at risk

2. Control is shared

Question 6

What are 2 disadvantages of a Sole Trader?

Answer 6

1. The owner takes all the responsibility for the business

2. The owner has unlimited liability

Question 7

What is the definition of unlimited liability?

Answer 7

If the business fails the personal assets of the owner can be used to pay business debts

Question 8

What is the definition of limited liability?

Answer 8

If the business fails the personal assets of the owner cannot be used to pay business debts.